Mexico leads the way towards implementing new NAFTA
Approval in the Mexican senate came with only one dissenting vote and just days after representatives from the three countries met in Mexico City to ratify amendments to the United States-Mexico-Canada Agreement (USMCA).
“It is a historical event that gives confidence and certainty to the economy, employment and labor rights,” said Monica Fernandez Balboa, president of Mexico’s Senate after the vote on Thursday. “The completion of this trilateral trade agreement will mean more investment, growth, peace and well-being for the country and will provide certainty for the context of the Mexican economy over the next 25 years.”
A culmination of two years of negotiations, solidification of the final text allays in-limbo fears of trade disruptions stemming from a trade war with China and a US campaign promise to renegotiate or withdraw from the 1994 North American Free Trade Agreement (NAFTA).
Agri-business Cargill Mexico, for one, applauded the signing of the revised agreement as a solution to preserve access to one of the most successful trade zones in the world and provide much needed security for agricultural producers and manufacturers.
“It will modernize trade rules between the three countries, support tens of millions of jobs and stimulate continued economic growth. We look forward to the prompt approval by the legislatures of this vital trade agreement,” the company said in a statement.
The new NAFTA
The updated and renamed agreement maintains much of the body of NAFTA, including the zero-tariff platform, but introduces a series of provisions that the Office of the United States Trade Representative says will create “more balanced and reciprocal trade.”
As revised, the pact expands market access for US dairy, poultry and eggs products into Canada and modernizes cooperation on biotechnology and gene editing. It also reduces the use of trade distorting policies and strengthens science-based health measures. New and updated rules govern digital trade, intellectual property, dispute settlement and the auto, steel and aluminum industries.
One of the key issues for Mexico was to resolve the US demands to place foreign inspectors in Mexican factories, which it viewed as an affront to its national sovereignty. In the amended agreement, the parties agreed to the creation of rapid response panels composed of independent labor experts to settle compliance disputes. Mexico also conceded to implementing serious reforms to minimum wage standards and collective bargaining protections for its workers.
“We have already delivered,” Mexican President Andres Manuel Lopez Obrador said upon receiving the news of ratification from the senate. “Now it is up to the congresses of the US and Canada. We are going to do very well, very well with this treaty.”
The Parliament of Canada and the US Congress are expected to approve the USMCA early next year.
